When a loved one passes away, their will serves as a final testament of how they wish their assets to be distributed among family, friends, and other beneficiaries. However, the process isn't always straightforward. There are instances where beneficiaries may feel that the distribution outlined in the will is unfair or not in accordance with the deceased's true intentions. In such cases, beneficiaries might consider disputing the distribution of the will.
At AANDI Lawyers, we specialise in dispute resolution services. Therefore, our team has outlined the circumstances under which beneficiaries can contest a will, the process involved, and the role of estate assets, life insurance policies, and superannuation death benefits in will disputes.
Understanding the role of a beneficiary
Who is a beneficiary?
A beneficiary is an individual or entity that is designated to receive assets, property, or other benefits from a deceased person's estate as outlined in their will. Beneficiaries can include:
- Family members, such as spouses, children, or siblings
- Friends or distant relatives
- Charitable organisations or trusts
- Business partners or associates
The expectations of a beneficiary
Beneficiaries generally expect that the distribution process will be smooth and in line with the wishes of the deceased. However, discrepancies or perceived unfairness in the will's provisions can lead to disputes. Some common reasons beneficiaries may consider disputing a will include:
- Feeling that they have been unfairly treated or excluded
- Suspecting that the will does not reflect the true intentions of the deceased
- Believing that the deceased was under undue influence when making the will
- Concerns about the validity of the will itself
In Australia, beneficiaries may also need to consider other financial elements, such as life insurance policies and superannuation death benefits, which can complicate the distribution process.
Grounds for disputing a will
Lack of testamentary capacity
A common ground for disputing a will is arguing that the deceased lacked testamentary capacity when making the will. Testamentary capacity means the deceased understood:
- The nature and effect of making a will
- The extent of the estate assets being distributed
- The claims of eligible persons, such as family members, to the estate
- The presence of any mental disorder or delusion that could influence the distribution
If a beneficiary believes the deceased did not meet these criteria, they may challenge the will based on a lack of testamentary capacity.
Undue influence or coercion
A will may also be disputed if the deceased was under undue influence or coercion. This occurs when someone pressures the will-maker to make decisions they wouldn’t have made independently. Examples include:
- A caregiver manipulating the will-maker to leave them a larger portion of the estate
- Family members pressuring the will-maker to exclude other beneficiaries
- Threats or emotional manipulation to alter the estate distribution
Proving undue influence is challenging and requires demonstrating that the will-maker's free will was overridden by another's influence.
Fraud or forgery
A will can be disputed on the grounds of fraud or forgery. This might occur when:
- The will was created or altered without the deceased's knowledge or consent
- Someone forges the deceased's signature or fabricates the entire will
- The deceased was misled about the contents of the will
If proven, fraud or forgery can invalidate the will, affecting the distribution of the estate assets.
Failure to meet legal requirements
For a will to be valid in Australia, it must meet specific legal formalities. If these are not followed, a beneficiary may dispute the will. Legal requirements include:
- The will must be in writing
- It must be signed by the will-maker in the presence of two witnesses
- The witnesses must also sign the will in the presence of the will-maker
Failure to adhere to these requirements can be grounds for challenging the validity of the will.
Family provision claims
In Australia, eligible persons who believe they have not received adequate provision from the will may file a family provision claim. This allows individuals who were financially dependent on the deceased or had a close relationship with them to contest the distribution. Commonly, family provision claims involve:
- Spouses or de facto partners
- Children (including adult children)
- Grandchildren who were financially dependent on the deceased
- Financially dependent friends or relatives
The court will assess whether adequate provision was made for the claimant based on factors like the relationship with the deceased and the size of the estate.
Superannuation and life insurance considerations
Superannuation death benefits and pension beneficiary disputes
In Australia, superannuation funds do not automatically form part of the deceased's estate unless specified by the superannuation death benefit nomination. Superannuation death benefits are typically paid directly to the nominated beneficiaries or, in the absence of a nomination, to the deceased's estate. There are two types of nominations:
- Binding death benefit nomination: a legally binding instruction to the superannuation fund on how to distribute the superannuation death benefits. If valid, the fund must follow this nomination.
- Non-binding death benefit nomination: a preference that the superannuation fund may consider but is not obliged to follow.
Suppose a beneficiary believes the distribution of superannuation death benefits is unfair. In that case, they may challenge the validity of the nomination or argue that the death benefit should be paid into the estate for distribution under the will.
Life insurance beneficiary disputes
Like superannuation, life insurance policies may not automatically form part of the deceased’s estate. The proceeds are usually paid directly to the nominated beneficiaries. However, disputes can arise if:
- The nomination of beneficiaries in the life insurance policy conflicts with the will
- The policyholder was under undue influence when making the nomination
- The insurance company has concerns about the validity of the nomination
Beneficiaries can challenge the distribution of life insurance proceeds if they believe the nomination was made under questionable circumstances or if there was no adequate provision for eligible persons.
Self-Managed Superannuation Funds (SMSFs)
A self-managed superannuation fund offers more control over the distribution of superannuation death benefits. However, they also introduce complexity in will disputes. Disputes may arise over:
- The validity of binding death benefit nominations within the SMSF
- The role of trustees in distributing superannuation death benefits
- Whether the SMSF forms part of the estate assets
Beneficiaries involved in an SMSF should seek legal advice to navigate the unique challenges of these funds in will disputes.
The process of disputing a will
Seeking legal advice
Beneficiaries wishing to dispute a will should first seek legal advice from an experienced Australian lawyer. Understanding the grounds for dispute and the potential outcomes is crucial in navigating the process.
Mediation and alternative dispute resolution
Mediation or alternative dispute resolution (ADR) can be a practical approach before going to court. ADR allows the parties to negotiate a settlement with the help of a neutral mediator, potentially avoiding lengthy and costly litigation.
Commencing legal proceedings
If mediation fails, the next step is to commence legal proceedings in court. The court will examine the evidence, including the validity of the will, superannuation death benefits, and any life insurance policy nominations, before making a decision.
Possible outcomes
The court may decide to:
- Uphold the will as it stands
- Alter the distribution of the estate assets
- Invalidate the will, leading to distribution under the rules of intestacy
- Reallocate superannuation death benefits or life insurance proceeds based on legal findings
When to seek legal advice for distribution disputes
Disputing the distribution of a will, particularly when it involves estate assets, life insurance policies, or superannuation death benefits, is complex and emotionally charged. Beneficiaries in Australia who believe they have valid grounds to challenge a will should seek legal advice to understand their options.
